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“Workers Are At The Mercy Of Markets”: The Great Recession Shifted Bargaining Power To Employers

The questions hanging over Labor Day 2014 are whether and when the United States gets a pay raise. Ever since the 2008-2009 financial crisis, the job market has been in a state of heartbreaking weakness. But the worst seems to be over. As Janet Yellen, chair of the Federal Reserve Board, recently noted, monthly increases in payroll jobs have averaged 230,000 this year, up from 190,000 in 2012 and 2013. The unemployment rate dropped to 6.2 percent in July from 7.3 percent a year earlier and a peak of 10 percent in October 2009.

Gains are also reflected in cheerier (or less gloomy) popular attitudes, says public opinion expert Karlyn Bowman of the conservative American Enterprise Institute. A year ago, Gallup found that 29 percent of workers feared being laid off; that’s now 19 percent. (Millennials are exceptions; their unemployment fears rose slightly.) In March 2010, 85 percent of Americans judged jobs “difficult to find,” a Pew survey reported. In July this year, the figure was 62 percent. Although confidence hasn’t returned to pre-recession levels, there’s been a genuine improvement in mood, says Bowman.

What’s missing are wage increases. Since late 2009, hourly earnings have risen at an annual rate of about 2 percent, but when corrected for inflation, “real” wage increases vanish, reports the Economic Policy Institute, a liberal think tank. The EPI says that median hourly wages were actually 0.4 percent lower in the first half of 2014 than in 2007. Using a different inflation adjustment (the “deflator” for personal consumption expenditures instead of the consumer price index) produces a 1.7 percent gain over the same period, says Scott Winship of the Manhattan Institute. Either way, wages are basically flat.

We should do better.

The Great Recession shifted bargaining power to employers. With jobs scarce, “workers just take what they can get,” says economist Dean Baker of the Center for Economic and Policy Research, a liberal think tank. Companies have controlled costs through layoffs, skimpy wage increases and greater reliance on independent contractors, jobs which often pay less and provide fewer fringe benefits. The unwritten post-World War II labor contract — in retreat since the late 1970s — finally expired. That contract presumed that large companies would provide workers with stable jobs and “real” annual increases in wages and fringe benefits.

Forget it. Wage increases aren’t guaranteed, and longtime workers are regularly dismissed. “There really is no security in the labor market,” says former Fed economist Stephen Oliner, now at AEI. On the labor market’s edges, firms like Uber (an on-call transportation company) and TaskRabbit (an online service that allows customers to solicit bids for specific jobs) have created digital markets for freelance workers. The temporary jobs provide cash and flexibility — but not much certainty or security.

Too many workers have chased too few jobs, weakening wages. But now the pendulum may be swinging in workers’ direction. Some economists contend that it already has. Two bits of information are routinely cited: the unexpectedly fast fall in unemployment; and the rise in reported job openings to 4.7 million in June, more than double the recession low and slightly higher than the pre-recession peak.

The worry is that the growing supply of openings and the shrinking pool of available workers might trigger an inflationary wage-price spiral. This concern seems premature. Other economists, including Yellen, have argued that there’s still substantial labor market “slack” (surplus workers wanting jobs), keeping a lid on wage gains. Their evidence seems stronger. Consider the U-6 jobless rate (U-6 includes the officially unemployed, discouraged workers and part-timers who want full-time jobs). In July, it was 12.2 percent, down from a monthly peak of 17.2 percent, though still higher than 2007’s 8.3 percent, before the recession.

But suppose we are nearing an inflection point, where worker supply and demand are in closer balance. That certainly wouldn’t be bad. Workers’ bargaining power would improve with tighter markets: markets where businesses have to pay a bit more to keep employees; where younger workers might have competing job offers; and where someone could quit with a reasonable expectation of finding another job. (Note that unions aren’t a plausible alternative to markets because they represent only 7 percent of private workers. The minimum wage suffers from a similar scale problem.)

A wage explosion seems unlikely; companies were too traumatized by the Great Recession to let costs get out of hand. Even in 2007, wage increases — unadjusted for inflation — were running only at about a 3.5 percent annual rate.

What’s ultimately at stake is the Great Recession’s lasting effect on labor markets. Are they in the process of reverting to their modern role, promoting steadier employment and higher living standards? Or has there been a major break from the past, ushering in a harsher, more arbitrary system whose outlines are still faint? On this Labor Day, the verdict is unclear.

 

By: Robert Samuelson, Opinion Writer, The Washington Post, August 31, 2014

September 1, 2014 Posted by | Great Recession, Labor Day, Wages | , , , , , , | Leave a comment

“Big Money, Big Mouth”: How The Megadonors Of The Right Think

Let’s be clear about who the political enemy is in this country:

Three years ago, Home Depot co-founder Kenneth Langone helped lead an unsuccessful effort by a group of GOP megadonors to persuade Gov. Chris Christie to make a run for president in 2012.

Now Langone, who remains a Christie cheerleader, said he is convinced the New Jersey governor is the “guy who can win” the 2016 presidential election — and that the George Washington Bridge lane closure controversy is in his rear-view mirror.

“If he decides, and I’d be more inclined to say when he decides to throw his hat in the ring, I think he’s going to be a formidable competitor,” Langone said in an interview. “People I talk to are still high on him. He looks fabulous. He looks healthy. He’s energized.”

Ken Langone is the same billionaire who told CNBC in January that Pope Francis ought to watch his mouth.

Pope Francis’ critical comments about the wealthy and capitalism have at least one wealthy capitalist benefactor hesitant about giving financial support to one of the church’s major fundraising projects.

At issue is an effort to raise $180 million for the restoration of St. Patrick’s Cathedral in New York being spearheaded by billionaire Ken Langone, the investor known for founding Home Depot, among other things.

Langone told CNBC that one potential seven-figure donor is concerned about statements from the pope criticizing market economies as “exclusionary,” urging the rich to give more to the poor and criticizing a “culture of prosperity” that leads some to become “incapable of feeling compassion for the poor.”

Langone said he’s raised the issue more than once with Cardinal Timothy Dolan, archbishop of New York, most recently at a breakfast in early December at which he updated him on fundraising progress.

“I’ve told the cardinal, ‘Your Eminence, this is one more hurdle I hope we don’t have to deal with. You want to be careful about generalities. Rich people in one country don’t act the same as rich people in another country,’ ” he said.

I’m going to take the Pope’s side on this one. And I’m going to get my hardware elsewhere.

 

By: Martin Longman, Washington Monthly Political Animal, August 31, 2014

September 1, 2014 Posted by | Home Depot, Kenneth Langone, Megadonors | , , , , , , | Leave a comment

“Obama And The Warmongers”: The Drums Of War And The Chants For Blood; The Politics Of The ISIS Threat

We seem to be drifting inexorably toward escalating our fight with the Islamic State in Iraq and Syria, or ISIS, as the Obama administration mulls whether to extend its “limited” bombing campaign into Syria.

Part of the reasoning is alarm at the speed and efficiency with which ISIS — a militant group President Obama described as “barbaric” — has made gains in northern Iraq and has been able to wash back and forth across the Syrian border. Part is because of the group’s ghastly beheading of the American journalist James Foley — which Michael Morell, a former deputy director of the C.I.A., called “ISIS’s first terrorist attack against the United States” — and threats to behead another.

But another part of the equation is the tremendous political pressure coming from the screeching of war hawks and an anxious and frightened public, weighted most heavily among Republicans and exacerbated by the right-wing media machine.

In fact, when the president tried to tamp down some of the momentum around more swift and expansive military action by indicating that he had not decided how best to move forward militarily in Syria, if at all, what Politico called an “inartful phrase” caught fire in conservative circles. When responding to questions, the president said, “We don’t have a strategy yet.”

His aide insisted that the phrase was only about how to move forward in Syria, not against ISIS as a whole, but the latter was exactly the impression conservatives moved quickly to portray.

It was a way of continuing to yoke Obama with the ill effects of a war started by his predecessor and the chaos it created in that region of the world.

In fact, if you listen to Fox News you might even believe that Obama is responsible for the creation of ISIS.

A few months ago, the Fox News host Judge Jeanine Pirro told her viewers that “you need to be afraid” because of Obama’s fecklessness in dealing with ISIS, adding this nugget:

“And the head of this band of savages is a man named Abu al-Baghdadi — the new Osama bin Laden — a man released by Obama in 2009 who started ISIS a year later.”

That would be extremely troubling, if true. But the fact-checking operation PolitiFact rated it “false,” saying:

“The Defense Department said that the man now known as Baghdadi was released in 2004. The evidence that Baghdadi was still in custody in 2009 appears to be the recollection of an Army colonel who said Baghdadi’s ‘face is very familiar.’

“Even if the colonel is right, Baghdadi was not set free; he was handed over to the Iraqis who released him some time later. But, more important, the legal contract between the United States and Iraq that guaranteed that the United States would give up custody of virtually every detainee was signed during the Bush administration.”

Fox, facts; oil, water.

But the disturbing reality is that the scare tactics are working. In July, a Pew Research Center report found that most Americans thought the United States didn’t have a responsibility to respond to the violence in Iraq.

According to a Pew Research Center report issued last week, however: “Following the beheading of American journalist James Foley, two-thirds of the public (67 percent) cite ISIS as a major threat to the United States.”

The report said that 91 percent of Tea Party Republicans described ISIS as a “major threat” as opposed to 65 percent of Democrats and 63 percent of independents.

The report also said:

“Half of the sample was asked about ISIS and the other half was asked about the broader threat of ‘Islamic extremist groups like Al Qaeda,’ which registered similar concern (71 percent major threat, 19 percent minor threat, 6 percent not a threat). Democrats were more likely to see global climate change than ISIS as a major threat.

Americans were thrilled by our decision to exit Iraq when we did, but support for that decision is dropping. In October 2011, Gallup asked poll respondents if they approved or disapproved of Obama’s decision that year to “withdraw nearly all United States troops from Iraq.” Seventy-five percent said they approved. In June of this year, the approval rate had fallen to 61 percent.

Yet 57 percent still believe that it was a mistake to send troops to fight in Iraq in the first place.

Now, Republicans are beginning to pull out the big gun — 9/11 — to further scare the public into supporting more action. Senator Lindsey Graham has said on Fox News that we must act to “stop another 9/11,” possibly a larger one, and Representative Ileana Ros-Lehtinen has warned, “Sadly, we’re getting back to a pre-9/11 mentality, and that’s very dangerous.”

Fear is in the air. The president is trying to take a deliberative approach, but he may be drowned out by the drums of war and the chants for blood.

 

By: Charles M. Blow, Op-Ed Columnist, The New York Times, August 31, 2014

September 1, 2014 Posted by | Foreign Policy, Middle East, War Hawks | , , , , , , , , | 1 Comment

“Happy Labor Day, Mom”: A Harsh Labor Market Where Women Were Regularly Punished For Not Being Men

I know this sounds absurd—it is absurd—but for some odd reason Labor Day reminds me of my mother. She was a school teacher, and I think she would have a good laugh to learn that so-called “education reformers” are accusing school teachers of being too powerful and protected. My father, who was himself a long-time member of our local school board, would probably snort at the ignorance of highly educated experts.

Together, they could set the record straight on education from the facts of their own lives. They fell in love when they were young and optimistic and talented. This was the 1920s when women had just won the right to vote, and both were newly graduated from four-year colleges—the very first in my mother’s family. My father completed graduate work in chemistry and was hired as a researcher by a Philadelphia manufacturer where he later invented useful products.

They faced one obstacle in their promising lives. My mother had to sign a teaching contract with a local school district in western Pennsylvania that would prohibit her from getting married. This crude violation of a young woman’s civil rights was commonly enforced around the country. Years later, I learned that my wife’s mother had to do the same thing to get a teaching job in Iowa. Recently, I reread the steamy love letters my parents wrote to one another during that school year of frustrated desire. I blushed for them.

At the Thanksgiving break, they abandoned abstinence and broke the school contract. But secretly. On the long holiday, they eloped to West Virginia and got married there. They told no one. My parents, I should add, were no-nonsense conservative Republicans, not given to reckless adventure or inflammatory political statements. I did think of my mother as an assertive proto-feminist. In retirement, both became Democrats because they thought Goldwater was a dangerous crackpot. In 1972, my dad declared early for George McGovern, while Mom held out for Shirley Chisholm.

Keeping the secret of their marriage may have been done to protect her eligibility for many more years as a teacher. It worked. Toward the end of her long life (she died three days short of 100) my mother got a letter each year from Ohio governors, congratulating her on being the oldest living recipient in Ohio’s teacher retirement system.

I tell this intimate story to make a point that the latter-day reformers do not seem to grasp. They have left out the human dimensions of a harsh labor market where women were regularly punished for not being men. School teachers from the beginnings of America’s public schools have been vulnerable to blatant exploitation—lower wages and harsher terms—and they have been exploited. The jobs could be filled by an abundance of educated single young women in need of incomes. Married women might have babies in the middle of the school year—an inconvenience to school administrators—so married women were banned. Similar gender biases affected nursing and other caring occupations, and to some degree still do.

The fundamental power shift for school teachers did not occur until the 1960s, when frustrated teachers rebelled against traditional school systems run top-down by superintendents and principals. As a young reporter in Louisville, Kentucky, I witnessed one of the early skirmishes in 1962.

One day I got a phone call from an organizer for the American Federation of Teachers who blithely announced that AFT intended to shut down the Louisville schools the following week with a citywide strike. I thought he was joking. AFT was based in East Coast big cities and had no more than fifty members among Louisville’s 2,000 teachers. The National Education Association (NEA) dominated most states those days, and it was run by and for the administrators, not rank-and-file teachers.

The AFT’s strike in Louisville was like a thunderclap—teachers did walk off and virtually shut down the system. Teachers were fed up. They were demanding a stronger voice and power in school affairs and school politics. In rural states like Kentucky, the poorest counties were frequently dominated by matriarchal political machines—women superintendents who controlled more jobs in their county than the men in county offices. The NEA got the message and swiftly adjusted. It became a full-fledged labor union like AFT. Instead of fronting for old-style political bosses, both organizations now try to speak for the interests of teachers and to defend them against political intrusions and other abuses.

These are the relevant facts that self-appointed billionaire reformers skip past. By demonizing the teachers unions and denouncing the tenure laws that protect teachers from arbitrary political reprisals, the do-good foundations have unwittingly cast themselves as a malevolent Daddy Warbucks ready to bury their opposition with tons of money.The Gates Foundation and some others do seem to be belatedly backing away from obvious mistakes, but the reform engine still threatens to undermine the common public school in favor of a deeply fractured system of sectarian and secular private sponsors claiming public money.

Impatient hedge-fund billionaires do not attempt to conceal their contempt for the rest of us. They are used to making money—fast—with no excuses for dawdlers. Witness what they have done to large segments of the overall economy. Education does not thrive in those conditions, because there is no standard of perfection in any schoolhouse that can survive brutal suppression of uniformity imposed by clumsy testing. A successful school not only makes room for dissent. It constantly nourishes it.

Of course, I am biased. But I think that was my mother’s teaching style. She taught first grade in an “inner city” neighborhood of Cincinnati where the students were not poor black kids but white kids from the mountains of Eastern Kentucky. They shared many of the same handicaps. Mom developed her own theories on how to teach reading to such children. It involved hand-eye coordination and other elements I could not follow. I have no proof that she succeeded, but I have a hunch she drove the principal nuts.

 

By: Wiliam Greider, The Nation, August 30, 2014

September 1, 2014 Posted by | Labor Day, Teachers, Women | , , , , , , | Leave a comment